Whatever the Strike's Outcome, Musk Wins.

"More than two days into the United Auto Workers strike against the Detroit automakers, one thing is clear: Elon Musk has already won.

And the billionaire tycoon isn't even involved.

Musk won before the strike began early Friday. He won before negotiations started two months ago. From the get-go, General Motors, Ford Motor and Chrysler parent Stellantis were expected to spend more on wages because of the union's pressure. The question is just how much of an increase, and so far their offers haven't pleased the union, igniting this past week's work stoppage.

Whatever happens, more money surely will be spent. Any wage increase further advances Tesla's already tremendous cost advantage in EVs over its older U.S. peers, which are contending with generations of legacy expenses while trying to steer a costly transition to electric from gas-powered vehicles.

In March, Musk revealed plans to build on his advantage by setting a goal of slashing manufacturing costs for the automaker's next-generation vehicles by 50%, an ambitious agenda that will depend upon advanced automation, savvy engineering and other changes.

The Tesla chief executive's actions this year have shown how Tesla can take advantage of a lower cost structure to engage in price wars with rivals around the world to juice sales.

In July, Tesla reported second-quarter profit that rose 20% even after reducing prices. Around the same time, in the midst of steep losses from its electric vehicles, Ford said it would slow its EV production growth.

All this is playing out as the UAW seeks more than what the Detroit automakers say they can afford and remain competitive.

The Detroit companies' labor costs, including wages and benefits, are estimated at an average of $66 an hour, according to industry data. That compares with $45 at Tesla, which isn't unionized and was founded 20 years ago.

A key difference between Tesla's compensation plan and that of the UAW workers revolves around company upside. UAW workers have been getting profit-sharing bonuses while Tesla workers receive stock options, which don't have a direct cash cost to the company. Over the years, Tesla shares have risen like a rocket, though there have been periods of turbulence. Shares this year have more than doubled.

UAW President Shawn Fain argues that past contracts haven't kept up with inflation, hurting the union's roughly 146,000 auto workers' spending power, and that members' sacrifices have helped make the companies profitable in recent years."This is our generation's defining moment," Fain said late Thursday before the walkout. "The money is there. The cause is righteous."

Shortly afterward, Ford responded, saying the union's demands would "more than double Ford's current UAW-related labor costs, which are already significantly higher than the labor costs of Tesla, Toyota and other foreign-owned automakers in the United States that utilize non-union-represented labor."

Many analysts, so far, expect the Detroit companies will ultimately absorb the added costs. "The much larger issue is that it adds incremental pressure to their already challenged transition to an EV world," Dan Levy, an analyst for Barclays, cautioned investors in a recent note

Art Wheaton, a labor expert at Cornell University, suggests that the UAW's ability to get higher wages could help put heat on Tesla during any renewed effort to organize there." [1]

1. Whatever the Strike's Outcome, Musk Wins. Higgins, Tim. 
Wall Street Journal, Eastern edition; New York, N.Y.. 18 Sep 2023: A.12.